XADM: Unable to Create Top Level Folders in Exchange Server

When you attempt to create a top level public folder in either the Exchange or Outlook client, you may receive the following error message:

This behavior occurs when an Exchange Server administrator limits who can create top level folders. This administrative feature of Exchange Server allows Exchange Server administrators to control the basic structure of how information in the public folders is organized. To use this feature:

1. Log onto the Exchange Server Administrator program.
2. In the Administrator window, click Configuration.
3. Double-click the Information Store Site Configuration object in the right pane to open the properties.
4. Click the Top Level Folder Creation tab.
5. Check whether there are either Distribution Lists or Mailboxes listed in either the Allow to create top level folders area or the Not allowed to create top level folders section area.
6. Make sure the user or users wanting to create top level public folders are not listed.

NOTE: When both the Allow to create top level folders and the Not allowed to create top level folders section are empty, everyone in the global address list can create top-level folders.

Use the Top Level Folder Creation property page to specify which users can create top-level public folders in Microsoft Outlook. Top-level public folders are those that exist at the highest tier of the public folder tree. Limiting the number of people who can create top-level public folders lets you control the public folder hierarchy. After a top-level folder is created, the owner of that folder can set permissions that allow other users to create subordinate folders below the top-level folder.